SUPPLY AND DEMAND

Otago Daily Times, Issue 21985, 21 June 1933, Page 8

SUPPLY AND DEMAND

THE UNBREAKABLE LAW Less is heard now of nostrums for the cure of the world depression, and the views of those who have held from the beginning that the artificial regulation of finance, trade, and commerce caniiot permanently overcome natural laws are receiving more attention. The time is long and the way is hard, but progress is being made towards stability. Dealing with the aspect that touches price levels particularly. Sir Arthur Samuel, in The Times Trade Supplement, puts a case that cannot fail in its: appeal to common sense. After quoting the report of the Macmillan Committee, that if a turning, point in the history of th» world price level had been reached, to which, in the end, the level of costs in the outside world would adapt itself, it would be out of all question for Grejt Britain to maintain a level of costs out of proportion to costs elsewhere, Sir Arthur Samue] offers arguments to prove that in the discussion of economic difficulties, underlying axiomatic principles have been disregarded. .He contends that the policy of reflation by the United States, when £200,000,000 was “ pumped into the credit stream ” to raise the price of primary commodities of the United States has been a failure. Wheat did not rise, but it fell in price. “So also,” he says, “have the efforts of-other countries failed to raise the price of rubber, coffee, tin, (copper, cotton, tea, sugar, and silk, by monetary manipulation, inflation, reflation, counter-deflation, restriction, and other methods of self-deception.” Time has proved that the law of suppb and demand is unbreakable, although there may be temporary results of managed currency interference in its working. In the long run the prices of prim; ary products depend upon the law of supply and demand. The main purchasing power of the world comes from the primary productions of the field and the mine.

“Two years ago,”. Sir Arthur Samuel states, “Australia could not sell for export her raw materials at the prices she was asking. They cost too much to produce. Other countries produced more cheaply because they paid leas in wages and provided ‘ lower social services. . Consequently, Australian products were too dear to tempt buyers in the competitive markets of the world. Australians customers would not buy her products except at lowered prices—hence her economic crisis, Australian costs of production were too high; prices asked were too high, and they had to come down.”